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Readers hoping to buy CropEnergies AG (ETR:CE2) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 17th of July in order to receive the dividend, which the company will pay on the 19th of July.

CropEnergies's next dividend payment will be €0.15 per share, on the back of last year when the company paid a total of €0.15 to shareholders. Last year's total dividend payments show that CropEnergies has a trailing yield of 2.5% on the current share price of €6.09. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether CropEnergies has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for CropEnergies

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see CropEnergies paying out a modest 45% of its earnings. A useful secondary check can be to evaluate whether CropEnergies generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (79%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that CropEnergies's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, CropEnergies's earnings per share have been growing at 19% a year for the past five years.

The company paid out most of its earnings as dividends over the last year, even though business is booming and earnings per share are growing rapidly. Higher earnings generally bode well for growing dividends, although with seemingly strong growth prospects we'd wonder why management are not reinvesting more in the business.